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Wednesday, March 22, 2023

Should You Invest in Alphabet (GOOG)?

Alphabet’s advertising is back in business after a difficult year due to the epidemic. Only a few corporations in the world can claim to have the same level of power as Alphabet. GOOG stock has fared admirably since its initial public offering in 2004.

However, 17 years after its first public offering, the world’s most popular search engine is no longer the growth engine it once was, and regulatory investigation has resulted in a massive antitrust case that jeopardizes Alphabet’s very existence.

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In fact, as popular consumer tech goods change, it’s becoming a hot topic in Silicon Valley as to whether Alphabet is falling behind.

Here’s a quick rundown of the Mountain View, California-based digital behemoth, its major business sectors, and – most crucially for potential investors – the benefits and drawbacks that might help you decide whether or not to purchase Alphabet stock.

Pros of Buying GOOG Stock

2020 was a challenging year for many businesses, and when money is tight, the first thing they cut is their advertising expenditures – terrible news for the world’s largest advertising platform.

In reality, Alphabet faced a stumbling hurdle in the second quarter that stockholders had not expected to see: its first year-over-year sales decrease.

Sales of second quarter 2020

Alphabet reported sales of $38.3 billion in the second quarter of 2020, down from $38.9 billion the year before – not a huge loss, but the fact that revenue was down was a significant warning signal for investors.

However, owing to a comeback in advertising income, the firm rebounded stronger than before in the fourth quarter. Alphabet generated $56.9 billion in sales in the fourth quarter of 2019, up 23% from the previous year’s fourth quarter. This is even more amazing given that revenue had grown 17% year over year in the fourth quarter of 2019.

Advertising Revenue in 2021

Advertising revenue, which increased to $46.2 billion from $37.9 billion in the same quarter of 2021, accounted for the vast bulk of this year’s rise.

Whatever happens to advertising-income, Google has cemented its position as the world’s most popular search engine. The search engine behemoth owns over 88 percent of the US market and around 92 percent of the global market.

For the time being, Android acts as a solid hedge against other search businesses gaining large mobile market dominance. Shareholders, on the other hand, must be relieved that Google’s core business appears to be stabilizing.

Aside from its big-time search engine cash and excellent brand, the company’s investment in diversification is the second advantage of owning GOOG stock. Its product portfolio includes self-driving vehicles, YouTube, artificial intelligence, and voice search.

Bottom Line: Should You Invest in Alphabet?

Alphabet isn’t flawless, and neither is any other stock. However, the company has a significant competitive edge in search and is working hard to diversify its business in order to achieve dynamic future growth.

There is no other business in the world that is as well-positioned as Alphabet, and this is the most compelling fundamental reason to invest.

Yes, Google is entering a new age in which regulation may be a big concern, but Big Tech rivals like Apple, Facebook, and Amazon are all under scrutiny. Alphabet, on the other hand, will be OK as long as its primary business area continues to expand, and the economy begins to stabilize.

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